A new analysis released recently by the American Council on Renewable Energy (ACORE) finds that confidence among both renewable energy investors and developers is at an all-time high. The report, “Expectations for Renewable Energy Finance in 2021-2024,” presents the results of a new survey of large financial institutions and renewable energy development companies on their confidence in the sector in the aftermath of the COVID-19 pandemic.
The new report also tracks progress on the $1T 2030: American Renewable Investment Goal, an initiative ACORE launched in 2018 to help secure $1 trillion in private sector investment in renewable energy and enabling grid technologies by 2030. One trillion dollars of investment over 2018-2030 would represent more than two times the historic investment in the US renewable sector before the campaign and help put us on a trajectory toward meeting President Biden’s goal of a carbon-free grid by 2035. One-sixth of the total $1 trillion campaign goal ($167 billion) has now been met, despite a 12% decline in renewable energy investment in 2020. To achieve the $1T 2030 objective, an average of $92.6 billion a year will need to be invested through 2029 – an annual increase of 59% over the 2020 investment level.
To gain a better understanding of the expected environment for renewable sector finance over the next three years, ACORE surveyed leading financial institutions and renewable energy development companies.
Key survey findings include:
- More than two-thirds of surveyed investors (68%) are planning to increase their renewable energy investments by more than 10% this year compared to 2020.
- Investors and developers have an “extremely confident” outlook on the growth of renewable energy and energy storage over the next three years, with nearly all surveyed companies planning to increase their investment or development activity.
- Tax equity remains the financing source hardest hit by the pandemic, according to both investors and developers.
- Energy storage and utility-scale solar rank as the most popular preferences for investment among surveyed investors over the next three years.
- Nearly all surveyed investors (90%) and developers (93%) report maintained or increased risk appetites in 2021 compared to 2020.
- Investors consider the US to be an attractive venue for investment compared to leading countries like China over the next three years.
- The PJM, CAISO and NYISO electricity markets rank as the most attractive U.S. markets for renewable energy investment and development over the next three years.
- Most investors expect the attractiveness of renewable energy as an asset class to increase compared to other asset classes in 2021-2024.
- A clear majority of investors and developers identify long-term extensions of the wind and solar tax credits and new standalone tax credits for energy storage and regionally significant transmission as effective federal policies for growing the sector.
In the report, ACORE outlines key policy reforms and market drivers to support the achievement of the $1T 2030 goal, including federal tax policy that provides a long-term level playing field in support of carbon-free electricity generation.
